Great money managers are like rock stars in the financial world.
Everyone knows Warren Buffett, but for those who love stocks, names like Benjamin Graham, John Templeton, and Peter Lynch are legendary.
These superstars of investing have a history of making investors’ money grow over a long time, often doing better than the overall market.
They’ve helped lots of regular folks save up big piles of money for their future.
Rules for Picking the Best Money Managers:
- Proven Winners Over Time: We only looked at managers who’ve consistently made their investors richer over many years.
- Retired: We’re talking about managers who’ve finished their careers and left a mark on the world of investing.
- Single-Person Managed Funds: We didn’t consider funds run by committees because the people in these groups might change during the time they’re investing your money. Plus, as John Templeton once said, he didn’t know of any mutual fund managed by a committee that had a consistently great track record. It’s more like they got lucky sometimes.
- Changing the Investment World: The best managers didn’t just make money for themselves; they changed how everyone thinks about investing.
| Top 5 Best Money Managers |
|---|
| 1. Benjamin Graham |
| 2. John Templeton |
| 3. T. Rowe Price, Jr. |
| 4. John Neff |
| 5. Peter Lynch |
What you'll learn:
1️⃣ Benjamin Graham
Benjamin Graham might not sound like a typical fund manager, but he’s often called the father of security analysis. Believe it or not, from 1936 to 1956, he ran something like a closed-end mutual fund with his partner Jerome Newman.
How He Invested: Graham was all about deep value investing. He liked buying things for less than they were worth.
His Best Move: One of his most famous moves was with GEICO (you know, the car insurance company). He got it when it was selling for $27 per share and it ended up soaring to a whopping $54,000 per share.
That’s like turning a few dollars into a small fortune! While most of Graham’s investments didn’t hang around for long (usually less than two years), he held onto GEICO stock for decades.
He also made money by doing low-risk arbitrage, which means he’d buy and sell assets to make a profit.
Giving Back: Graham wrote some important books, like “Security Analysis” with his buddy David Dodd in 1934. Then, he followed up with “The Interpretation of Financial Statements” in 1937 and “The Intelligent Investor” in 1949.
Those books even inspired Warren Buffett to learn from Graham. Buffett studied under him at Columbia University and worked for him at the Graham-Newman Corporation.
Starting Something Big: Graham also played a role in starting what would eventually become the CFA Institute. Back in 1914, way before the SEC came into the picture, he saw the need to have certified security analysts. That’s why the CFA exam exists today.
Passing on the Knowledge: Besides teaching Buffett, Graham had lots of other students who went on to have amazing investment careers. They didn’t become as famous as their teacher or their most famous classmate, but they still did pretty darn well.
How Much Money He Made: People argue about exactly how much Graham’s fund, the Graham-Newman Corporation, made.
But John Train said it earned about 21% every year for 20 years. If you put in $10,000 in 1936, you’d get around $2,100 every year for two decades, and you’d still have your original $10,000 when it was all done. That’s some serious money-making!
Popular Quote: “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
2️⃣ Sir John Templeton
Sir John Templeton, known as “the dean of global investing,” wasn’t just any investor. He was so great that Queen Elizabeth II knighted him for his philanthropy.
How He Invested: Templeton had a unique strategy. He liked to buy investments when they were at their absolute lowest, what he called “the point of maximum pessimism.”
For instance, at the start of World War II, he bought shares in every public European company that cost less than $1 each, even ones that were going bankrupt. He did it with $10,000 he borrowed.
After four years, he sold them for $40,000, and that’s how he got his start in the investment business. Templeton also had a knack for spotting hidden success stories around the world, looking for countries that were about to turn things around before anyone else noticed.
His Big Wins: Templeton had some amazing investments, like buying European shares at the beginning of World War II.
Investing in Japan in 1962, picking up Ford Motors when it was nearly bankrupt in 1978, getting into Peru in the 1980s, and even shorting (betting against) technology stocks in 2000.
Making a Mark: He played a big role in building Franklin Resources (now known as Franklin Templeton Investments). There’s even a college at Oxford University’s Saïd Business School named after him.
How Much Money He Made: Templeton managed the Templeton Growth Fund from 1954 to 1987. If you put $10,000 into Class A shares in 1954 and kept reinvesting your dividends, by 1992 (when he sold the company), you’d have over $2 million.
That’s like turning pocket change into a fortune! His annual return averaged about 14.5%.
Popular Quote: “If you want to become really wealthy, you must have your money work for you.”
3️⃣ T. Rowe Price, Jr
T. Rowe Price, Jr. was a Wall Street legend. He didn’t dive into the investment world until the 1920s and didn’t start his first fund until much later, in 1937.
He believed that what’s good for the client is good for the firm, a philosophy that still guides many investment firms today.
His Investment Style: Price was all about value and long-term growth. He invested in companies with solid management, operating in promising, long-lasting industries, and leading the pack. He wasn’t in a hurry to buy and sell; he liked holding onto investments for decades.
His Big Wins: Price’s investments included Merck in 1940, where he made over 200 times his original investment. He also had a taste for Coca-Cola, 3M, Avon Products, and IBM.
His Legacy: Price was a pioneer in the investment world. He was one of the first to charge a fee based on the assets he managed, rather than getting a commission.
This practice is standard today. He also helped develop the growth style of investing, where you buy and hold for the long term while diversifying widely. He founded T. Rowe Price, a publicly traded investment manager, back in 1937.
The Numbers: It’s hard to pin down individual fund results for Price since he managed several funds.
However, two stand out: his first fund from 1950, which had the best 10-year performance of the decade, around 500%, and the Emerging Growth Fund, started in 1960, which also did exceptionally well with investments like Xerox, H&R Block, and Texas Instruments.
Popular Quote: “Change is the investor’s only certainty.”
4️⃣ John Neff
John Neff was a seasoned investor with over 30 years at Wellington Management Co., where he managed three of their funds. He had a unique way of approaching investments, often taking indirect routes to popular industries.
For instance, during a housing boom, he might invest in companies that supplied materials to homebuilders.
His Investment Style: Neff was all about value investing. He looked for companies with low price-earnings ratios (P/E ratios) and solid dividend yields. When the fundamentals or the price didn’t align with his target, he sold. He also had a knack for understanding the psychology of investing.
His Special Math: Neff had a nifty formula. He added the dividend yield to the earnings growth and divided it by the P/E ratio.
If the result was over 1.0, it got his attention. For example, with a 5% dividend yield, 10% earnings growth, and a P/E ratio of 10, he’d get 15/10 = 1.5. That was attractive to him.
His Big Win: In the mid-’80s, Neff started amassing a significant stake in Ford Motor Company. Three years later, it had skyrocketed to nearly four times what he initially paid.
His Legacy: Neff penned a book, “John Neff on Investing,” which outlines his year-by-year career experiences.
The Numbers: Neff managed the Windsor Fund for 31 years until 1995, delivering a 13.7% return compared to the S&P 500’s 10.6% during the same period. That translates to more than 55 times the initial investment made in 1964.
Popular Quote: “It’s not always easy to do what’s not popular, but that’s where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized.”
5️⃣ Peter Lynch
Peter Lynch, a Wharton School of Business graduate, was known for his unwavering commitment to success. He adopted a strategy he called “relentless pursuit,” where he tirelessly visited companies, seeking even the slightest positive change that the market might have missed.
When he found something promising, he started with a small investment and added more as the story improved. This approach eventually led him to manage thousands of stocks in the world’s largest actively managed mutual fund, the Fidelity Magellan Fund.
His Investment Style: Lynch is typically associated with long-term growth investing, but he also gained from traditional cyclical recovery and value plays.
His Winning Picks: Lynch scored big with investments in Pep Boys, Dunkin’ Donuts, and McDonald’s. These stocks became “tenbaggers” – investments that grew tenfold.
His Contributions: Lynch’s influence transformed Fidelity Investments into a household name. He authored books like “One up on Wall Street” (1989) and “Beating the Street” (1993), offering guidance to DIY investors, encouraging them to leverage their knowledge and compete with Wall Street experts.
The Numbers: Lynch’s famous success story includes turning $1,000 invested in Magellan on May 31, 1977, into an impressive $28,000 by 1990.
Popular Quote: “Know what you own, and know why you own it”
☞ Final thoughts
These exceptional money managers didn’t just amass wealth for themselves; they also paved the way for their investors to prosper. What sets them apart is their willingness to take an unconventional approach to investing, often going against the crowd.
As seasoned investors can attest, charting your unique course and consistently outperforming the market is no small feat. It’s clear that these five individuals have rightfully earned their esteemed positions in the annals of financial history.
